Event Title

Presenter Information

Location

Diamond 341

Start Date

30-4-2015 1:45 PM

End Date

30-4-2015 3:25 PM

Project Type

Presentation

Description

Ensuring universal access to formal financial services has important implications for poverty reduction goals. Full financial inclusion entails having access to affordable and relevant products; beyond credit these include savings, payment and insurance services. Despite having a highly conducive microfinance environment, Perus financial inclusion indicators pale in comparison to other countries with similar income levels in the region. Lack of standardized data poses a great challenge for the study of integration to the formal financial system. To this date, most research has been done from a supply-side perspective, which measures access to formal financial services by banking outreach indicators and availability of other financial services in a given area. This approach alone, however, is often insufficient to unveil the degree of financial exclusion that certain segments of the population face. In this context, this research examines individual characteristics that are likely to influence the likelihood of being banked. Effectively, the metric used in this research measures usage of financial services rather than just access -which is wider than usage. For the quantitative analysis, the latest national household survey available, ENAHO 2013, is used to build a probit model that predicts the likelihood of being banked for all working-age adults in the sample. The findings suggest that financial exclusion is associated with rural residency, low income levels, informal employment status, and low education levels. The model also shows that women who are head of households are less likely to be banked. Finally, I explore potential policy pathways to increase usage of formal financial services by those currently unbanked and underbanked.

Faculty Sponsor

Andreas Waldkirch

Sponsoring Department

Colby College. Economics Dept.

CLAS Field of Study

Social Sciences

Event Website

http://www.colby.edu/clas

ID

1644

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Apr 30th, 1:45 PMApr 30th, 3:25 PM

Understanding the Drivers of Financial Inclusion in Peru: A Demand-side Approach

Diamond 341

Ensuring universal access to formal financial services has important implications for poverty reduction goals. Full financial inclusion entails having access to affordable and relevant products; beyond credit these include savings, payment and insurance services. Despite having a highly conducive microfinance environment, Perus financial inclusion indicators pale in comparison to other countries with similar income levels in the region. Lack of standardized data poses a great challenge for the study of integration to the formal financial system. To this date, most research has been done from a supply-side perspective, which measures access to formal financial services by banking outreach indicators and availability of other financial services in a given area. This approach alone, however, is often insufficient to unveil the degree of financial exclusion that certain segments of the population face. In this context, this research examines individual characteristics that are likely to influence the likelihood of being banked. Effectively, the metric used in this research measures usage of financial services rather than just access -which is wider than usage. For the quantitative analysis, the latest national household survey available, ENAHO 2013, is used to build a probit model that predicts the likelihood of being banked for all working-age adults in the sample. The findings suggest that financial exclusion is associated with rural residency, low income levels, informal employment status, and low education levels. The model also shows that women who are head of households are less likely to be banked. Finally, I explore potential policy pathways to increase usage of formal financial services by those currently unbanked and underbanked.